LONDON Jan 22 Morgan Stanley Commodities has signed a deal to buy gas and electricity in the wholesale market for Britain's Spark Energy, improving the small retail firm's ability to compete with big utilities, the companies said.
Morgan Stanley will buy 387 gigawatt-hours of electricity and 33.8 million therms of gas per year for Spark Energy, which the retailer will then supply to residents of 86,000 rental properties, they said on Wednesday.
"This is a landmark deal for Spark, which allows us to compete with the big six energy companies on a more level playing field," Chris Gauld, managing director of Spark Energy, said in a statement.
Britain's six largest power and gas utilities - EDF Energy , RWE npower, SSE, Scottish Power , Centrica and E.ON - cover around 97 percent of the retail energy market.
Smaller competitors to the big six typically do not produce energy. Energy regulator Ofgem is imposing changes in the retail market, such as generation auctions, to make it easier for independent companies to access energy supplies.
Spark Energy said its trading agreement with Morgan Stanley would allow it to carry out long-term hedging against price movements.
Morgan Stanley is one of a few major banks that still actively trade European power and gas as tighter regulation and a fall in prices has made the market less attractive.
Consumer energy bills have been rising over the past years due to added costs from government subsidies and modernisation of the grid, leading many households to switch to new, independent energy suppliers.
Spark Energy started supplying domestic energy in July 2008 and is the only British utility focused on the residential letting sector.